Do you have a side business? A lot of people do today. Not only are there more opportunities to have one (think internet here), but there are also more reasons than ever. Let’s face it, raises are no longer annual events, and even when they are they’re hardly worth waiting for. And that better new job just doesn’t seem to be out there.

The solution to these problems is often creating your own business as a side venture. But side ventures can create problems with primary employers. Employers don’t want their full time staff working on other ventures because it can distract from or even compete against the work that you do for them.

If you have a side business, should you let your employer know about it? The answer: it depends.

Existing Job vs. New Job

Much of the question comes down to timing. If you already have your side business up and running when you take a new job, it’s probably best to let the employer know from the start, no matter what the reason for the business might be.

There’s no whoops factor when you start a new job with an established business. You won’t be able to wiggle around the fact should you be discovered later. If the employer is OK with you having a side business from the start, you’re free to operate. If they frown on it, you can make the decision if you even want the job under that circumstance.

Existing jobs are more complicated, and often come down to the reason why you started the business in the first place (see the last section). If your employer has a written policy prohibiting outside business activities, discovery can mean either a cease and desist directive or termination.

Sometimes when your employer doesn’t know about your business it can be an albatross for you. It means worrying about your employer finding out and all the burdens that brings. In such a situation, it might be better that your employer knows that way you’re free to act. If your employer is OK with it, your situation improves; if not, you may have to make other arrangements.

Your Employer’s Policy On Outside Business Ventures Makes All The Difference

Some employers are fine with outside work activities—they see it as your time, your life. Others prohibit it, but this usually happens only in certain job capacities where outside business activities could compromise your full-time job. Still others, probably most of them, allow you to work outside—at least superficially—but generally discourage you from doing it. Where your employer falls on this list is what really matters.

If your employer has no position on it, you have no problem at least from an official standpoint. Still, you may not want your employer to know. For one thing, any time there’s any issue about your performance on your job, it might be assumed that your side business is the reason why. Other times, your loyalty to the company may be questioned. And during layoffs, you may be one of the first to be let go under the assumption that you have other means of survival.

If your employer prohibits outside work activities, having one could get you fired, but beyond that there may be ethical or faith based issues on your part. How do you feel about keeping your job under false pretenses? You’ll be working outside of your employer’s rules—and thus violating them. In extreme circumstances, this could even result in civil actions.

The biggest issues will be with employers who don’t officially condemn side businesses, but don’t support them either. This is the gray zone, and it’s probably most employers. If you know they’ll try to discourage your business, it may be best not to tell them on that basis alone. You don’t need the stress of your employer putting pressure on you in addition to all the other complications of juggling a full time job with a side business.

If the side business you have is a very public one—like a blog—it will be very difficult to keep that hidden no matter what your employer’s position is, or what your desire to conceal it may be. You may consider using a pseudonym if secrecy is a concern.

What Is The Purpose Of Your Side Business?

One mitigating factor to all other considerations is your reason for having your side business. Specifically what that reason is may determine whether you tell your employer or not. There may be more, but I’ve come up with three reasons that could affect your decision:

To generate extra income. You’re trying to earn extra income because maybe what you earn on your full time job isn’t enough to cover your expenses or financial plans. This will be an ongoing situation because the side business isn’t intended to replace the job, but to supplement your income. You probably intend to keep your job, so it may be best to disclose what you’re doing. It can be better to be upfront about it, rather than risking an unexpected discovery and all the problems that may bring.

Preparation for career switch. Running a business as a side venture while collecting an fulltime paycheck is one of the lowest risk ways to go into a new business. If your plan is to start and develop the business into a full time venture that will replace your job, you may not want to tell your employer about it. Your enthusiasm for your business combined with your declining interest in your job could lead to an earlier termination than you hoped for. You’re mostly buying time, and secrecy can be your friend.

Anticipation of a job loss. If you have strong reason to believe that your job is in jeopardy anyway, you may want to throw caution to the wind and let the boss know what you’re doing. Since the job will be lost in time anyway, you need to use the time beforehand to fast forward the progress of your business. Secrecy will probably not be an advantage if that’s the case.

There’s no solid advice here. Everything depends on individual circumstances, such as those listed above, or even your own motivations, resources or potential job prospects should the worst happen.

If you have a side business and a full time job, are you better off coming clean and letting them know, or keeping quiet about it?

This is a bit of a depressing topic, isn’t it? After all, we’re in the middle of summer and it’s just about the peak of the high vacation season, right? Why try to throw cold water on everyone’s good times?

The presidential election will be over in three short months, and no matter who wins it’s anyone’s guess what will happen after that, or even

I’m a mean person who’s trying to rain on everyone else’s summer fun.

I’m not sure that we ever really got out of the last recession, or if the last one wasn’t just an uglier continuation of the one before that, but the reality is that we have a downturn every few years. Since the last one officially ended sometime during 2009, 2013 seems like a good guess on the arrival of the next one. That gives us about a year to prepare, and that’s Reason #4 why I’m writing about this topic.

In the strange way that life works when we’re prepared for trouble, it never seems to happen! So how do we prepare for the next recession?

Avoid (or Tone Down) Major Purchases

Major purchases do two things that hurt us when the economy turns bad: 1) they drain savings, and/or 2) they put us in debt. I’m talking about cars, houses, furniture, boats—anything that has the potential to cost a couple thousand dollars or more.

Before making any major purchases, ask yourself the following questions:

Do I actually need this item, or do I mostly just want it?

Will this item put money in my pocket? (for example, a car for work, or a computer for business)

Were I to lose my job six months from now, will I regret having made this purchase?

Even if it’s something we truly need, do we have the ability to buy it without draining our savings or adding more debt?

Would a decent second-hand model get the job done?

Major purchases can’t be easily undone—especially in recessions.

Find Income Sources Outside Your Job

For most of us, the biggest threat from recessions is the loss of a job. One of the best ways to deal with this (in advance) is by creating income sources outside your job. It’s not just a matter of adding more income, but also of exploring and developing other career directions. This is especially important if the business or industry you’re in is already wobbling.

Working outside your job will give you the experience and business contacts and references that might enable you to transform a side job to your next full time position. Get your foot in the door before the economy takes another slide.

Another option is to start a side business. You can start it and grow it while you’re still on your employer’s payroll, but if you lose your job you can ratchet the business up to full time.

Say NO to New Debt

The last thing you ever want to do is to create financial obligations during good times that you’ll have to pay for during not-to-good times. This is what drives foreclosures and car repossessions. If you want to avoid that fate, don’t add any new debt.

And while you’re at it, start working on paying off old debt. Debt is a big enough pain during good times, but its pure excess baggage you don’t need to be lugging around during the bad ones. If you lose your job, you can always cut expenses quickly, but debt takes time. You have that time right now.

Build Up Those Savings

At a minimum, a fattened bank account can give you breathing room to deal with a sudden job loss or other financial calamity. It enables you to face problems without having to borrow from banks, or beg from family. Start working on increasing your savings now.

Remember those major purchases I recommended that you not make? You can add to your bank balance with the money that you didn’t spend on them. And the extra income from your side job or side business can go right in the bank too. A year from now you could have a few months living expenses sitting in the bank, and that’ll feel good.

Get In Shape

This reads like my most ridiculous preparation, but actually it isn’t. In fact, it’s far from it. Exercising, dieting and improving your overall physical condition are always important, but never more than when hard times hit.

Consider:

If you’ll be in the job hunt sometime next year, you’ll be glad lost a few pounds and toned up a bit. When jobs are hard to get, they often go to those who look the most capable of doing them.

In the event you have to juggle two or three income sources, you’ll need the increased stamina getting in shape can bring.

The healthier you are, the less you’ll need to spend on healthcare, and the less time you’ll lose from work.

Concentrating on your health could be the significant distraction you need that will boost your mental and emotional state at a time when finances are getting difficult.

A recession will come whether or not you’re prepared. But if you are prepared, there’s a good chance it won’t be your recession! And if it doesn’t come, you’ll be better prepared for what ever else you want to do in your life. Like that run for financial independence you may have been putting off for a few years.

Conveniences are nice to have, but they’re not always necessary. And when you’re looking to save money, they’re a good place to start. There are so many services, so many gadgets, so many policies we buy mostly because others do, or because they make us feel better. But that doesn’t mean we need them.

Take a close looks at some of these conveniences you might have in your life, and see if you can’t save some money by either reducing them or getting rid of them completely.

Cable TV With 200 Channels

Cable TV is a real scandal when you think about it; you pay for 24/7 access to 200 channels even if you only watch 20 of them for no more than an hour or two a day! Not only is much of the programming totally useless to you, but you also have DVDs and your internet to keep you entertained.

See if you can get a deal with your cable provider to get a reduced package of channels at a lower price. If not, think seriously about eliminating cable altogether.

Cell Phone Internet Access

Cell phone internet access is a trend that’s sweeping the western world now, but unless you need it for business purposes, it’s mostly a toy that you’re paying for. Besides, since you already have the internet on your home computer, and on your laptop, isn’t adding it to your cell phone a bit of overkill?

Never waste money paying for overkill!

The Latest, Hottest Game or Gadget

Part of the problem with games and gadgets is that they aren’t cheap. If you need to have the latest you may be flirting with gadget addiction, and that’s an expensive hobby. Gadgets run the gamut, but from what I’ve seen with video and computer games, they’re only entertaining until you “beat” the game, then you’re looking for a new challenge, a.k.a., a new game. Where does that end?

Prescription Drug Coverage

A lot of people feel that prescription drug coverage is an absolute necessity, and it can be—if you’re on ongoing drug therapies. But if you aren’t and you only need an occasional antibiotic for temporary illness, a prescription drug plan is mostly a waste of money. It will cost you far more to keep it than you’ll get back in benefits.

Prescription coverage is usually a rider to a health insurance policy, so you can cancel it without disturbing the rest of the policy.

Fitness Club Memberships

There are two issues here, one is the person who signs up for a fitness club membership, then rarely or never uses it. The other is the fact that there’s not much you do in a gym that you can’t do outside or in your own home. Try checking out some Youtube videos under “fitness” and you’ll see what I mean.

A gym membership is good if you’re really committed to fitness and can easily afford it, but if you’re looking to reduce expenses, this one should be near the top of the list.

The Latest, Greatest Computer

People often want a premium computer than can handle every imaginable application, and they pay a premium price to get it too. This is fine if you need this type of computer for business purposes, but it can be a colossal waste of money if you only want it “just in case”.

Never pay $1,000 for what a $400 computer can do. Added bonus: replacement parts on lower priced computers are also cheaper, so you save twice.

And here’s something else…if you insist on having the best computer, you’ll probably replace it as soon as an even better one comes out—no matter how much you paid for the old one.

A New Car Every 3-5 Years

Unless you put an unusual number of miles on your car each year, replacing it every few years makes no financial sense. The argument is usually given that a new car allows you to save money on repairs, but rest assured that the yearly total of monthly payments will more than offset repair costs on a car that’s over five years old.

A Bigger House

I haven’t met a person who doesn’t think their house is too small. But if you’ve been living in it for several years, it isn’t too small at all—it’s just the desire for something bigger nagging at your soul.

To put my assumption into perspective, the average American home is bigger than it’s ever been, and bigger than anywhere else in the world. As small as you think your home is, always remember that most of the world, and most of the people throughout history have lived in something much smaller.

And to calm the desire for a larger home, just think about all the extra money you’ll have as a result of not trading up. Like a lower house payment, lower utility payments and lower insurance . I don’t know about you, but extra money always makes me feel good!

Multiple Credit Cards

Some people collect credit cards the way others collect baseball cards, but how many do you really need? Most people can get by nicely with one, and maybe a second if you need to segregate business costs. The problem with multiple credit cards is that they bring multiple annual fees. That’s wasted money on cards you don’t use. And if you do use them—that can be an even bigger problem!

Extended Warranties

Extended warranties are usually a bad deal and the proof is that companies offer them at all! Think about it, why would someone sell you a warranty to “protect you” and lose money doing it? They aren’t losing money, and if they aren’t it’s because it’s costing you more than you’re getting for it. Many warranties contain so many loopholes that they’re close to worthless anyway.

The financial meltdown that began in 2007/2008 hasn’t just eliminated jobs, its destroyed careers entirely. Millions of people have been unemployed for six months, a year, two years or even longer. Extended unemployment benefits that initially allowed up to 99 weeks have been cut back to 73 weeks, and unless the program is restored, benefits will be cut back again by the end of this year.

If you’re one of the people who lost their career during or since the meltdown, or if you’re facing the prospect of disappearing unemployment benefits and you need to get back into the job market after a long layoff, you’re facing an uphill fight. There’s fierce competition for jobs, little chance of on-the-job training and no small number of employers who are reluctant to hire the unemployed.

But here are some strategies that could help you get back into the job market, if only gradually.

Get A Part-Time Job

If you’ve been unemployed for a long period of time, getting back into the job market will be like starting over. It’s very much like when you were a teenager looking for your first job. You have to start somewhere, and a part-time job is a way to ease in gradually.

No, a part-time job isn’t like a full-time job—you probably won’t have benefits and you’ll get nothing close to a living wage. But here are a few things a part-time job can do for you:

Working part-time will get you out, about and circulating, and meeting people who might help you find a full-time job

It will provide you with a current work reference when you apply for jobs

A part-time job could turn into a full-time job down the road

A part-time job can be an opportunity to earn-and-learn your way into a new field

Earning money in any kind of job improves self-esteem, and that’s something that probably needs to be rebuilt after a long period of unemployment

When you apply for full-time jobs elsewhere, you’ll have something to put in that ever present little box that asks “Present Occupation?”

Working part-time won’t be the answer to your career problem, but view it as a necessary and temporary step on the road to something better.

Do Volunteer Work

One of the biggest problems with being unemployed for a very long time is that you can get out of the work routine entirely. It’s not just a time management issue either—there’s a psychology to working that can get lost when you haven’t done it for a while. A good way to get around that is by doing volunteer work. You can do this at churches, charities and even hospitals and schools.

Even though you won’t be paid for the work you do, it can get you back “into the groove”, giving you a place to go everyday and something other than your unemployment status to think about. And much like a part-time job, it gets you out meeting people and making new contacts, and might even turn into a paying job at some point.

Look Into Temporary & Contract Assignments

This is an area that’s gotten tougher in recent years—it’s been degraded by the same factors that have weakened the overall employment picture. Even so, it’s still worth looking into.

Even if the assignments are sporadic, they will place you on the inside of potential employers where you can get valuable contacts who might help you get a job. Also, many companies are now hiring primarily by temp-to-perm, giving them an opportunity to see potential employees in action.

If nothing else is happening, give it a try—when you’re unemployed, doing something is always better than doing nothing.

Work For Small Businesses

Everyone wants to work for large employers; they pay more and offer more comprehensive benefits. As good as that sounds, it also creates a traffic problem—too many applicants for too few jobs. As a result, large employers can be very selective when it comes to hiring and they don’t look too kindly on the unemployed.

If you’ve been out of work for a long time, look for small businesses instead. I’m talking small as in no more than five to ten employees. You won’t get anything close to top dollar, and benefits will probably be out of the question, but small businesses do have their advantages, and they aren’t minor.

Small businesses can’t draw in the top talent—sometimes they can’t get any talent at all! And being closer to the ground, small business owners are likely to be more sympathetic in regard to your long period of unemployment. If you have a skill set that matches their needs, and there’s a good personality fit, you can get hired much more quickly than you could at a large employer.

While you’re working at the small business, you’re getting new experience and training that could translate into a better position somewhere else later on.

When All Else Fails, Try Working For Free

This is similar to volunteering, only you’re doing it with for-profit businesses instead of charities. Most organizations have plenty of work that needs to be done—they just can’t afford to pay anyone to do it. That’s an opportunity for you!

Find out what jobs a business needs done that they can’t afford to pay for, and offer your services to do it for them. This will work better with small employers than with large ones, and there are several ways you can play this:

You can use it as a chance to show your worth to the business—if they see how good and reliable you are working for free, they may decide they can’t live without you, and make you an offer for a paid position

While working for free at a business you’re also building contacts and an important referral who may be able to help you land a paid job elsewhere

After completing one unpaid assignment, they may call you back again—for pay!

By troubleshooting at one business, you can start doing the same at others on a paid basis; as you build “clients” you’re beginning to develop your own business—self-employment could be the ultimate solution to your career problem.

Working for free won’t be easy, but is a chance to start making things happen, and that’s what you need to do when you’ve been out of work for a long time.

Have you gone through a very long unemployment? What did you do to get back into a job?

For many, many years the renting-vs.-owning question was a done deal when it came to housing. Everyone who could own a home did, and everyone who couldn’t aspired to do so as soon as possible. Is that still true today? Is renting a better option? And if so, what changes have caused it?

Renting Vs. Owning: 5 Reasons You May Be Better Off Renting

House Prices Aren’t Rising Any More

When house prices were rising steadily owning made far more sense than renting. You were building wealth in the form of increasing home equity while you were living in the property. But that dynamic has been missing for the past five years and even if it does return, it’s unlikely that it will be anything like the price increases we’ve seen in the past.

Consider the following:

Mortgage rates are at historic lows, house prices are lower than they have been in years, and yet prices show few signs of recovery

The 76 million-strong Baby Boom generation have entered the retirement years—a typical time of trading down or selling off housing completely

Generation Y is showing nothing like the fever to own a home that previous generations did

Millions of households have been impaired by the financial meltdown, effectively removing them from the housing market for a very long time

Though employment has been improving, jobs security is conspicuously absent

It seems that the combination of these factors are putting a lid on house prices and probably will for the foreseeable future. And if prices aren’t rising, there’s no imperative to own right now. Better to rent and see how it all plays out.

Freedom To Follow The Jobs

Let’s spend a little more time on item #5 from above. When you buy a home you’re usually signing a mortgage note that will bind you to the house for something like 30 years. Can you conceive of a job that you’ll have for 30 years?

Probably not.

Jobs and even careers are becoming notoriously unstable for reasons that appear to be beyond the financial meltdown. A 30 year mortgage requires some level of income stability for the term of the loan, and that may require not just changing jobs, but also uprooting to follow them to distant places.

If you have to make a geographic move to find work in your field, owning a home will complicate matters. You’ll have to sell or rent out your home in order to make the move. And if you can’t do either, you may have to pass up the job opportunity.

When you rent, it’s far easier to pick up and follow a job.

A House Is A Capital Trap

It’s not just a mortgage you have to contend with when you buy a home; you also have a down payment tied up in it. That wasn’t much of a problem when you could easily sell a home after just a few years—for more money than what you paid for it—or borrow out the equity any time you wanted. Today, your down payment is likely to be tied up for many years.

In addition, when you own a home you have to put money into repair and maintenance, adding thousands of dollars to the money you already have tied up in the house.

At a time when so many people are dealing with job and career issues, as well as debt problems, can you afford to tie up thousands of dollars in equity in a house? When you rent, all of your money can be held in liquid accounts ready for your use.

Maximum Financial Flexibility

Here’s something we don’t like to think about too much…if you were to experience a permanent income reduction, what would you do to lower your house payment to adjust to the smaller paycheck?

If you rent, you can move to a lower priced home or apartment, or even move in with family. If you own, you first have to sell your house. In today’s market, selling a house can take months or even a year or more. Worse, if you’re in a negative equity position, you may not be able to sell at all.

Renting provides the financial flexibility that’s more consistent with today’s economic and employment circumstances. Owning, because it’s long term in nature, is rigid and locks you into a lifestyle you may not be able to sustain—or get out of.

Some people may consider such thinking to be negative; I consider it being prepared.

The Mortgage Interest Income Tax Deduction Isn’t What It Used To Be

Real estate agents often hype the mortgage interest and real estate tax deductions as a compelling reason to own a home rather than to rent. Renting, after all, offers no income tax deduction. Two factors are now weighing against that assumption though.

First, interest rates are at very low levels—a 4% interest rate on a $150,000 mortgage, will produce only a $6,000 mortgage interest deduction. Second, the standard deduction is $11,900 for a married couple filing jointly in 2012; it’s possible that even owing a house will not get you any more than $11,900 in deductions. At best, you may only get additional deductions on part of your housing costs, but nothing like the 20%, 30%, or 40% deduction agents are quick to point out.

The mortgage interest and real estate tax deductions continue to be a real factor for higher income households buying higher priced homes. But for many middle class households, and most lower income ones, the deduction will make only a minor improvement in your cash flow.
Am I saying you shouldn’t buy a house? In many cases, yes, that’s what I’m saying. It’s not as “right” as it was a few years ago, not for a lot of people. Consider the value of owning against the possibility that the home could drop in value—would you buy knowing that might happen? Do you feel your job/career is stable enough that you’ll be able to make the payments and not need to move to another city for the foreseeable future? Is your financial situation strong enough that you could weather a prolonged period of unemployment and still keep up the house payments?

These questions were always a part of the homeownership equation—they’re just more relevant now than ever.

What do you think about owning versus renting today? Do you think the pendulum has swung in favor of renting?